Housing Recovery May Validate Fed’s QE3

Legitimate signs of life in the housing market suggest the Federal Reserve may have chosen the right lever to stimulate the economy when it launched its latest stimulus bid last month.

In September, officials on the monetary policy-setting Federal Open Market Committee decided to embark on an open-ended program of mortgage bond buying, in an effort that will increase what is now a nearly $3 trillion central bank balance sheet. The purchases follow in the tracks carved out by past asset-buying efforts, which had relied more heavily on the purchase of Treasurys.

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